India: Godawari Power and Ispat posts stronger Q3 results, high-grade pellets boost realisations

Central India’s leading steelmaker, Godawari Power and Ispat Limited (GPIL), recently announced its Q3FY’22 results, highlights of which are given below:

• Total iron ore production in Q3FY’22 was at 0.62 million tonnes (mnt) as against 0.48 mnt in Q3FY’21.
• The parent company’s (GPIL’s) total pellets production stood at 0.63 mnt, a significant rise of 16% y-o-y and 14% q-o-q. Subsidiary Ardent Steel’s (ASL’s) total pellets output stood at 0.19 mnt, up by 6%, q-o-q.
• Total pellets sales from parent GPIL stood at 0.43 mnt, up by 25%, q-o-q. ASL’s total pellets sales were at 0.18 mnt in Q3FY’22.
• Total steel billets output for the quarter stood at 0.09 mnt, down by 14% as compared to 0.10 mnt in Q3FY’21 due to shutdown of some of the old furnaces in Q3.

Highlights of the investors’ call:

• Expect to achieve nearly 100% pellet capacity utilization: The company expects to achieve 100% pellet capacity utilization of 2.4 mnt in FY’22.
• Eye on higher production of high-grade pellets: The company’s share of high-grade pellets has been around 60% while that of normal grade (Fe 63%) has been around 40%. The high-grade pellets have been fetching good response in the domestic market, as well as in international markets, with a few deals concluded with Jindal Steel and Power (JSPL) and Tata Steel. The company plans to ramp up production of high-grade pellets on higher captive iron ore production volumes from its Ari Dongri mines.
• Price realizations higher y-o-y: The iron ore pellet realisation of GPIL has dropped by 17% q-o-q to INR 10,836/t due to the fall in international prices of iron ore. However, it is 20% up when compared to Q3FY’21. Pellet prices in the domestic market are currently at around INR 11,500-12,000/t. However, export offers for high grade pellets are at INR 13,000/t.
• Ramping up iron ore production in Aridongri mines: The current iron ore production in the company’s Aridongri mines was up by 28% y-o-y and 33%, q-o-q. With an aim to improving mining functions and reach production of 3 mn t in the next 2-3 years, benefication and additional crushing facilities will be set up in the respective mines.
• HB wire rod production lowered: The production of HB wire rods has been lowered on account of increased exports of high-grade wire rods.
• Solar plants replacing grid power to improve operating margins: The company plans to set up three solar power plants with a total capacity of around 155MW with an aim to reduce their grid power requirement.

The solar power plant with a capacity of 70MW will be set up at Rajnandgaon. The construction has already started and it will commence by Q1FY’23. The commissioning of the solar project will be coinciding with the commissioning of the steel melting shop and power generated will be used in billet making.

A 25MW plant will be installed in Bemetara and the power generated will be supplied to the company’s captive iron ore mines with an aim to increase the capacity of iron ore crushing. The land acquisition is in process and commissioning is expected by Q3FY’23.

Another plant with a capacity of 60MW will come up in Hira Ferro Alloys Limited, Bemetara. The size of the solar power plant has been reduced from 70MW to 60MW due to certain technical parameters. The land acquisition is under process and it will commence by Q3FY’23.

The existing 73-MW power generation will continue to remain at that level. However, the company now plans to replace old turbines with new high-efficiency ones with capacity of 48MW which will increase power generation by 8MW without any additional fuel and operating cost.